Base Building Continues

Stocks continue to build a base at current levels and it is very likely that bears have put in a floor for us. Yes, this is a strange statement but the fact is that when either bulls or bears become overly exuberant or one emotion (fear or greed) begins to dominate the market prices are very likely to reverse from the near term direction it had been heading. In this case that means we should have a floor from which stocks will now begin to lift off from. Yesterday OEX traders bought twice as many puts as calls putting this sector in clearly overly bearish territory. Bonds pulled back, but we stated yesterday they might. This is now base building and not a slow bleed. Stocks may continue to chop around in front of the long weekend but we believe a tradable bottom is now in place. Note: The market will be closed tomorrow for the holiday weekend so we wish everyone a safe and happy holiday. Our schedule will be back to normal on Monday.